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Samsung Elec CEO hoses down chip war fears

Tue, Oct 14, 2014 - 11:17 AM

Samsung's plan to invest 15.6 trillion won (US$14.67 billion) in a new South Korea chip plant stoked concerns about the industry's profit outlook - PHOTO: AFP

[Seoul] Samsung Electronics Co does not expect a price war to break out in the semiconductor industry next year even though it is ramping up capacity, the chief executive of the world's biggest memory chip maker said on Tuesday.

"We'll have to wait and see how things will go next year, but there definitely will not be any game of chicken," Kwon Oh-hyun told reporters on the sidelines of an industry event. A Samsung spokeswoman confirmed his remarks to Reuters.

Memory chip makers have reported strong profits this year thanks to better-than-expected demand for personal computers and servers as well as careful capacity management. Analysts believe industry conditions will remain favourable in 2015, forecasting similar market dynamics.

Samsung's plan to invest 15.6 trillion won (US$14.67 billion) in a new South Korea chip plant stoked concerns about the industry's profit outlook. Some investors worry that the firm could ramp up supply and undercut prices to squeeze rivals like SK Hynix Inc and Micron Technology Inc.

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Analysts have downplayed the likelihood of such aggressive behaviour, noting that production from the facility will not begin until 2017. They say margins in the memory business are important to Samsung, given the mobile division's falling smartphone profits.